In this case, even more than most, the adage is apt: "You can't tell the
players without a scorecard." The relationships between and among various "players" in
the Douglas County healthcare community were close, overlapping, and often tangled--and, indeed, that dynamic permeates plaintiffs' intentional interference allegations.
Accordingly, it is not merely useful, but imperative, to clearly identify the four primary
actors at the outset:

● DCMC. DCMC (or its predecessors) operated an acute care hospital in
Roseburg from the 1950s until February 2000.

● Mercy. Mercy also operated an acute care hospital in Roseburg for many
years, and that hospital continued to be in business as of the time of the trial
in 2002.

● RSCI. RSCI was a corporation engaged in the operation of the Roseburg
Surgicenter, an outpatient surgery facility. Most of RSCI's shareholders
were Roseburg physicians who performed outpatient surgeries at the
Roseburg Surgicenter facility. Beginning in 1991, a partnership consisting
of RSCI, as 75 percent general partner, and DCMC's principals, as 25
percent limited partners, operated the Roseburg Surgicenter.

● SureCare. SureCare was a health insurance provider that was owned by the
Douglas County Individual Practice Association, a group of local
physicians. SureCare provided benefits to Douglas County members of the
Oregon Health Plan (OHP) and, in that capacity, solicited bids and entered
into contracts with healthcare providers for the provision of such services.
In addition, SureCare provided health insurance benefits to private parties,
including Mercy--that is, SureCare was the healthcare insurance provider
for Mercy's employees.

For many years, DCMC and Mercy were "very strong competitors."
However, because Roseburg was not sufficiently large, neither was operating at full
capacity, and meaningful expansion of one could come only to the other's detriment. By
the mid-1990s, Mercy had increased its market share in the inpatient care market to
approximately 80 percent, and DCMC's share had correspondingly declined.

At the same time, both DCMC and Mercy had identified the increased
participation in outpatient surgical care--and, particularly, a closer relationship with RSCI
and its physician shareholders--as "pivotal" to DCMC's competitive success, and even
survival. Mercy determined that, if it could persuade the Roseburg Surgicenter doctors to
associate with it, and not with DCMC, it would be able to force DCMC "to close its
facility" and "vacate the community." For its part, RSCI was also concerned that it
needed to have closer business relationships with one or both of the hospitals in order to
ensure that it would be able to provide outpatient surgery services to managed care
patients.

DCMC's and Mercy's conflict was not limited to courting the Surgicenter
and the physician shareholders of RSCI. At the same time, in early 1998, DCMC and
Mercy were competing to provide medical services to OHP members in Douglas County.
Before 1998, SureCare had contracted with a number of care providers, including both
Mercy and DCMC, to provide medical services to OHP members. However, in 1998,
SureCare sought to enter into an exclusive contract with a single provider for hospital
services for OHP patients.

Our analysis of the principal issue on appeal, viz., the legal sufficiency of
DCMC's proof of Mercy's use of allegedly "improper means," turns largely on the
circumstances of Mercy's agreement not to pursue the alleged $400,000 "debt" and of
Mercy's $250,000 payment to SureCare. Accordingly, we recount those circumstances in
some detail.

Throughout 1997, Mercy provided services to OHP patients. SureCare
reimbursed Mercy for those services at the rate set in a contract for services in 1996;
Mercy and SureCare did not enter into a new contract for services to be provided in 1997.
In November 1997, Mercy noted in a letter to SureCare that "we need to discuss and
agree upon an acceptable capitation rate for the 1997 contract year." Mercy then
proposed that the $28 PMPM proposed for the 1998 contract year would be "the rate that
we require as the minimum payment for 1997." In January 1998, in response to
SureCare's solicitation of bids for provision of 1998 services, Mercy proposed, as part of
its bid that:

"[I]n a gesture of good faith, [Mercy is] willing to call it 'even' when
considering our open account for 1997. To reiterate, Mercy has gone
through the 1997 year without a contract. That means we were paid 1996
rates for the entire year of 1997. It has been previously agreed that we
would settle up on a final rate for 1997. As an additional token of our
ongoing commitment to DCIPA [Douglas County Individual Practice
Association] and SureCare, [Mercy] will accept as payment in full,
whatever Mercy has already collected, or is in the process of collecting, for
1997."

Mercy and SureCare later altered their characterization of the $250,000
payment. Instead of the "future IBNR refund" characterization, Mercy styled the
$250,000 payment as having been given in consideration for SureCare's agreement to
waive "early termination rights" under the agreement by which SureCare provided health
insurance benefits to Mercy's employees. In response to further inquiries by DCBS,
SureCare gave the following explanation:

"Mercy Medical Center made a 'no strings attached' donation of $250,000 to
SureCare Health Plans. At the time of the donation, there was nothing
given or implied to be given in exchange for this donation.

"In April, it was found that a non-profit organization cannot give
monies to a for-profit organization because of antitrust and [related] issues.
Due to this, SureCare then entered into an agreement to waive its right of
termination of the Group Health Plan Agreement with Mercy Medical
Center. This was completed by the first of May, but made retroactive to the
date of the donation."

Thus, as subsequently styled by both Mercy and SureCare, the $250,000
payment did not, in fact, prove to be a "'no strings attached' donation." Rather, SureCare
ultimately gave consideration for that payment. Nevertheless, DCBS apparently accepted
the latter-day characterization of the $250,000 payment and does not appear to have
initiated any action against SureCare based on that payment or on the varying
representations regarding that payment.

That did not, however, conclude the matter of the $250,000 payment; one
last twist remained. Because of the exclusive nature of Mercy's OHP contract with
SureCare, other healthcare providers, including Surgicenter, had been excluded from
providing surgical services to OHP patients. In the fall of 1998, Mercy, SureCare, and
RSCI entered into an agreement by which Mercy agreed to a "carve out" arrangement.
Under that "carve out," Mercy subcontracted with the Surgicenter for the Surgicenter to
provide certain outpatient surgery services to OHP patients. Mercy funded that
subcontract arrangement, in part, with what was, in effect, a $150,000 refund from
SureCare of Mercy's original $250,000 payment. That is, SureCare effectively returned to
Mercy $150,000 of Mercy's original $250,000 payment, and Mercy, in turn, applied those
monies to fund the "carve out."

That "carve out," with the concomitant expansion of business for RSCI's
physician shareholders, did not occur in isolation. Rather, contemporaneously with the
"carve out," Mercy continued in its efforts to induce RSCI and its shareholders to relocate
the Surgicenter to Mercy's campus. Plaintiffs, despite their limited partnership with
RSCI, were not included in the negotiations between Mercy and RSCI regarding the
relocation of the Surgicenter.

Ultimately, in December 1998, Mercy and RSCI reached a tentative
agreement that Mercy would enter into a joint venture with both Surgicenter partners
(RSCI and DCMC's principals) to locate the Surgicenter at Mercy. When DCMC learned
of that proposal, it refused to agree to it. Thereafter, in April 1999, Mercy leased the
space where the Surgicenter was then located. RSCI then told DCMC that the
Surgicenter would have to be relocated because that space had been leased to another
party.

At that point, in the summer of 1999, with no chance of bringing a surgery
center to DCMC and little support from local doctors, DCMC abandoned its expansion
plans. In February 2000, DCMC ceased operating. The Surgicenter did not, in fact,
ultimately relocate to Mercy.

Plaintiffs initiated this action against Mercy and RSCI alleging, as relevant
here, that Mercy had intentionally interfered with DCMC's business relationship with
RSCI and its doctors. The case was tried to a jury over 15 days in March and April 2002.
At the close of evidence, Mercy moved for a directed verdict on the claim for intentional
interference with economic relations, arguing that plaintiffs had presented no evidence of
"improper means" or "improper purpose," and further arguing that no evidence supported
a conclusion that Mercy had caused DCMC to lose business and, ultimately, to cease
operations. The trial court granted the motion, expressing its view that plaintiffs'
evidence that Mercy's actions had caused DCMC's closure was inadequate:

"Mercy had some time ago chosen the path to upgrade, modernize and it
may have been perceived by [DCMC] as a conspiracy between Mercy and
the Surgery Center and so forth to do them in but it's just as likely and in my
opinion more likely that this was done just in the ordinary course of
business and that [DCMC] had lost its capacity to respond to a challenge."

(Emphasis added.)

On appeal, plaintiffs assert that the trial court's expressed rationale "cannot
be reconciled with the proper standard" governing the allowance of motions for directed
verdict. In particular, the trial court's reliance on its own weighing of the evidence was
erroneous. We agree.

"Consistent with those earlier cases, this court has held more recently
that 'the jury must be permitted to consider every claim on which the
plaintiff has presented some evidence tending to establish each element of
that claim.' State v. Brown, 306 Or 599, 602, 761 P2d 1300 (1988)
(emphasis in original). In other words, '[o]nly when there is no evidence to
support an element may the claim be withdrawn from the jury's
consideration.' Id. at 603. Moreover, this court consistently has held that,
when deciding a motion for directed verdict, a court must not weigh the
evidence. Rather, the court must consider all the evidence, including
reasonable inferences drawn therefrom, in the light most favorable to the
party opposing the motion. See, e.g., Wootten v. Dillard, 286 Or 129, 136,
592 P2d 1021 (1979) (explaining standard)."

(Footnote omitted; emphasis in original.) Here, the trial court's assessment that it was
"just as likely and in my opinion more likely" that Mercy's actions had not caused
plaintiffs' damages involved precisely the sort of weighing of evidence proscribed under
Bolt and its antecedents. Rather than determining whether plaintiffs had adduced "some
evidence tending to establish each element" of the intentional interference claim, Brown,
306 Or at 602, the court determined that Mercy had presented more persuasive evidence
on the question of causation. In that regard, the trial court erred.

That error does not, however, necessarily compel reversal, because Mercy
urges an alternative basis for affirmance of the directed verdict. In particular, as before
the trial court, Mercy contends that plaintiffs failed to present legally sufficient evidence
that Mercy acted either with an "improper purpose" or through "improper means." We
turn, then, to that alternative contention.

A claim for intentional interference with economic relations requires proof
of six elements:

"(1) the existence of a professional or business relationship (which could
include, e.g., a contract or a prospective economic advantage), (2)
intentional interference with that relationship, (3) by a third party, (4)
accomplished through improper means or for an improper purpose, (5) a
causal effect between the interference and damage to the economic
relationship, and (6) damages."

McGanty v. Staudenraus, 321 Or 532, 535, 901 P2d 841 (1995). Here, the prima facie
sufficiency of plaintiffs' proof of the first three elements is not at issue--that is, DCMC
had business relationships with RSCI and the Surgicenter doctors, and Mercy, a third
party, intentionally interfered with those relationships. As discussed previously, a jury
question exists as to the final two elements--viz., whether Mercy's acts actually injured
DCMC's economic relationship with third parties and the extent, if any, of plaintiffs'
consequent damages. Thus, our inquiry reduces to whether plaintiffs produced any
evidence that Mercy's interference was accomplished for an "improper purpose" or
through "improper means."

"One who intentionally causes a third person not to enter into a
prospective contractual relation with another who is his competitor or not to
continue an existing contract terminable at will does not interfere
improperly with the other's relation if

"(a) the relation concerns a matter involved in the competition
between the actor and the other and

"(b) the actor does not employ wrongful means and

"(c) his action does not create or continue an unlawful restraint of
trade and

"(d) his purpose is at least in part to advance his interest in
competing with the other."

(Emphasis added.) Comment g to section 768 amplifies subsection (d):

"The rule stated in this Section developed to advance the actor's
competitive interest and the supposed social benefits arising from it. If his
conduct is directed, at least in part, to that end, the fact that he is also
motivated by other impulses, as, for example, hatred or a desire for revenge
is not alone sufficient to make his interference improper. But if his conduct
is directed solely to the satisfaction of his spite or ill will and not at all to
the advancement of his competitive interests over the person harmed, his
interference is held to be improper."

(Emphasis added.)

In this case, plaintiffs point to their proof of Mercy's declared objective that
DCMC close its hospital in Roseburg, see ___ Or App at ___ (slip op at 3-4), and contend
that, from that evidence, the jury could have found that Mercy acted with an "improper
purpose." Plaintiffs particularly invoke Top Service Body Shop, in which the court
observed that, if the defendant had acted with the "sole design of injuring Plaintiff and
destroying his business," that would be sufficient to prove "improper motive." 283 Or at
210. Plaintiffs' reliance on Top Service Body Shop in that regard is misplaced for at least
two reasons.

First, the plaintiff and the defendant in Top Service Body Shop were not
competitors; thus, the court had no occasion to consider the application of Restatement
(Second) of Torts § 768(1)(d). (6) Second, although the court in Top Service Body Shop
did note that the plaintiff's pleading was sufficient to allege "improper motive," 283 Or at
210-11, it went on to hold that the plaintiff had not adduced evidence of improper motive
sufficient to avoid a judgment notwithstanding the verdict. Id. at 212. In particular, the
court concluded that, although the plaintiff had presented evidence of alleged acts of
interference, "these acts were wholly consistent with [the defendant's] pursuit of its own
business purposes as it saw them and did not suffice to support an inference of the alleged
improper motive to injure [the plaintiff]." Id. at 212. Thus, the court viewed the
defendant's conduct, which was "wholly consistent with [the defendant's] pursuit of its
own business purposes," as being insufficient to support an inference that the defendant
had acted from an improper purpose.

Our inquiry thus narrows, finally, still further: Did plaintiffs adduce
evidence from which the jury could have found that Mercy, "through improper means,"
intentionally interfered with existing or prospective business relationships between
DCMC and RSCI or the Surgicenter doctors?

In Top Service Body Shop, the court outlined the contours of "improper
means":

"[Improper means] may be wrongful by reason of a statute or other
regulation, or a recognized rule of common law,11 or perhaps an established
standard of a trade or profession. * * *

"11 Commonly included among improper means are violence, threats
or other intimidation, deceit or misrepresentation, bribery, unfounded
litigation, defamation, or disparaging falsehood. See Fleming, [The Law of
Torts 612-14 (4th ed 1971)], Prosser, [Handbook of the Law of Torts §129
at 936-37 (4th ed 1971)], Restatement (Second) of Torts § 766, Comments j,
k, § 767, Comment c (Tent. Draft No. 23, 1977). As the latter comment
points out, in a claim of improper interference with plaintiff's contractual
relations, it is not necessary to prove all the elements of liability for another
tort if those elements that pertain to the defendant's conduct are present.
For instance, fraudulent misrepresentations made to a third party are
improper means of interference with plaintiff's contractual relations whether
or not the third party can show reliance injurious to himself."

283 Or at 209-10, 210 n 11.

"Improper means" must be independently wrongful by reason of statutory or
common law, and include "violence, threats, intimidation, deceit, misrepresentation,
bribery, unfounded litigation, defamation and disparaging falsehood." Conklin v. Karban
Rock, Inc., 94 Or App 593, 601, 767 P2d 444, rev den, 307 Or 719 (1989). That is, the
means must be wrongful in some manner other than simply causing the damages claimed
as a result of the conduct. Id.

Plaintiffs alleged that Mercy engaged in actionable "improper means" in 11
particulars. A comprehensive and exhaustive discussion of the substance, and ultimate
deficiency, of each of those specifications would be of no benefit to the bench or bar.
Accordingly, we address only two of those specifications--the two that plaintiffs most
emphasize on appeal--viz., Mercy's alleged "forgiveness" of SureCare's $400,000 "debt"
and Mercy's alleged misrepresentations regarding the $250,000 payment to SureCare. We
determine, without further discussion, that Mercy was entitled to a directed verdict as to
plaintiffs' remaining specifications of "improper means."

We begin with Mercy's agreement, given in the context of seeking the
exclusive OHP contract from SureCare, not to pursue recovery of approximately
$400,000 from SureCare as an additional payment for previously rendered services.
Plaintiffs suggest that that agreement violated 42 USC section 1320a-7b, which provides
criminal penalties for paying remuneration, including kickbacks, bribes, or rebates, to
induce another to furnish "any item or service for which payment may be made in whole
or in part under a Federal healthcare program[.]"

Plaintiffs' position is untenable for either of two reasons. First, it does not
appear that plaintiffs invoked 42 USC section 1320a-7b before the trial court. More
particularly, plaintiffs did not advance any cogent argument that the resolution of a
disputed matter constituted the sort of "remuneration" prohibited under 42 USC section
1320a-7b. As noted, ___ Or App at ___ (slip op at 5-6), although Mercy had been
seeking additional payment for services for which SureCare had already paid, there was
no evidence that SureCare was, in fact, legally obligated to pay the disputed additional
amount.

Second, and more fundamentally, plaintiffs did not, and could not, establish
the requisite nexus between the alleged "improper means" (the $400,000 "debt
forgiveness") and the alleged actionable interference (interference with the relationships
between DCMC and RSCI and the physicians associated with RSCI and the Roseburg
Surgicenter). That is a matter distinct from causation of damages, the fifth element of the
tort, which focuses on the relationship "between the interference and damage to the
economic relationship." See McGanty, 321 Or at 535 (emphasis added). Rather, it
pertains to the antecedent fourth element--intentional interference with the relationship
"accomplished through improper means." Id. (emphasis added). That is, the fourth
element prescribes a nexus between the "improper means" (or "improper purpose") and
the interference with the business relationship, but the fifth element requires a causal
nexus between the interference and damage to the relationship.

In particular, plaintiffs' theory of liability was as follows: (1) Mercy
obtained the exclusive OHP contract from SureCare in part because of the "wrongful"
$400,000 "debt forgiveness." (2) Because of the exclusive OHP contract, Mercy was
able, by way of the "carve out" arrangement, to subcontract OHP outpatient surgeries to
the Surgicenter. (3) Because of the "carve out," Mercy was able to induce RSCI and the
Surgicenter doctors to violate their obligations to DCMC and to elect to relocate to
Mercy's campus rather than to the projected expanded DCMC complex. In sum, with
respect to the $400,000 "debt forgiveness," plaintiffs' theory of liability was not that
Mercy directly used "improper means"--e.g., coercion, fraud, defamation, etc.--to
interfere with the relationships between DCMC and RSCI and the Surgicenter doctors.
Rather, plaintiffs' theory was that Mercy used the fruits of prior improper conduct in order
to subsequently interfere with a competitor's relationships with its partner and existing or
prospective "customers."

That relationship between "improper means" and the alleged interference is
too attenuated to constitute actionable tortious interference. As noted, a plaintiff claiming
intentional interference with economic relations must prove intentional interference with
a business relationship with a third party that is "accomplished through improper
means[.]" McGanty, 321 Or at 535 (emphasis added). The words "accomplished
through" indicate the necessity of a direct connection between the "interference" and the
"improper means." That construct does not encompass the circumstance in which a party
engages in improper conduct to obtain resources from a third party that it later uses to
compete for business.

Here, the alleged interfering conduct was Mercy's subcontracting of OHP
work to the Surgicenter doctors by way of the "carve out." The alleged "improper means"
was Mercy's agreement, in obtaining the OHP contract months earlier, to "forgive"
SureCare's "debt." Thus, the "improper means" was several steps removed from the
alleged "interference" with the relationship between DCMC and RSCI and the
Surgicenter doctors.

The circumstances here are analogous to a situation in which a business
owner embezzles funds from his grandmother and uses those funds several months later
to wine and dine a competitor's customers away from the competitor: Although
embezzlement is certainly "improper," using embezzled funds to later wine and dine a
competitor's customers does not transform the wining and dining into actionable
"improper means" of obtaining customers. Although the interference would not have
occurred but for the prior improper conduct, the actual act of interference was not itself
improper. Accordingly, the alleged $400,000 "debt forgiveness" did not constitute
actionable "improper means"; nor did it transform the later "carve out" into "improper
means."

In sum, although we agree with plaintiffs that the trial court's stated reason
for granting the directed verdict was erroneous, the result nonetheless was correct because
plaintiffs failed to adduce sufficient evidence to present a jury question as to either
"improper purpose" or "improper means."

2. Appellants' opening brief offers the following cogent explanation for the operation
of a "capitated" arrangement between an insurer and a healthcare provider:

"Under a 'capitated' plan such as SureCare's OHP plan, an insurer
contracts to pay a hospital a fixed amount per month for every
member of the health plan--a payment 'per capita,' whether or not
any member receives treatment * * *. Thus, if there were 10,000
members in the Douglas County OHP program, a capitated
contract rate of $50 per member per month ('PMPM'), would
require SureCare to pay a medical provider $500,000 per month in
return for the provider's agreement to treat any of the 10,000 OHP
plan members who sought treatment during the term of the
contract."

4. Even upon a careful reading of the record, the "IBNR" reference is inscrutable.
We do not understand Mercy to defend that characterization of the purpose of the $250,000
payment. In all events, given Baker's later, contradictory characterization of the payment
(described below), a trier of fact could find the "IBNR" explanation to have been a
misrepresentation to DCBS regulators.

6. In Top Service Body Shop, the plaintiff was an auto body repair shop, and the
defendant was an insurer. The gravamen of the plaintiff's tortious interference claim was that the
defendant had engaged in practices directing third parties (insurance claimants) to other body
shops. 283 Or at 203.

7. Plaintiffs' reliance on Aylett v. Universal Frozen Foods Co., 124 Or App 146, 861
P2d 375 (1993), is misplaced. In Aylett, the defendant, a potato processor, rejected the plaintiff's
potatoes but would not release its right of first refusal when another potato processor wanted to
buy those potatoes, and did so in order to retaliate against the other potato processor. We held
that, although it might be inferred from the evidence that the defendant was pursuing legitimate
business purposes, there also was evidence--e.g., the defendant's admission that certain actions
had been undertaken for the purpose of retaliating against the plaintiff--from which a jury could
find that the motive was solely retaliatory. Id. at 153.

8. Paragraph 47 of plaintiffs' operative fourth amended complaint identifies various
"protectible business relationships" for purposes of the intentional interference claim, but does
not include any reference to SureCare. Given the disparities in the parties' bids for the exclusive
OHP contract and the $20 PMPM difference between DCMC's bid and the $28 PMPM figure
identified in SureCare's bid solicitation, it is unsurprising that plaintiffs did not pursue such a
claim.

9. At trial, plaintiffs abandoned their contention that the $250,000 payment itself
was somehow improper and caused SureCare to award the exclusive OHP contract to Mercy.
However, plaintiffs did not abandon their contention that Mercy had misrepresented to
government agencies "the nature of the $250,000 payment to SureCare and * * * that the money
was not to be repaid."

10. A second hypothetical, somewhat similar to our first, is illustrative: Rather than
embezzling funds and then using that money to entertain the competitor's customers, the business
owner, upon hearing that the customers' favorite restaurant is insolvent, conspires with the
restaurant's owners to defraud their creditors so that the restaurant can remain open. But for that
improper conduct, the restaurant would have closed and the business owner would not have been
able to engage in the act of interference, viz., entertaining the competitor's customers at the
restaurant.